GREENING SUPPLY CHAIN IN RETAIL SECTOR INTRODUCTION GSC strengthens & build greater support with suppliers for additional environmental initiatives GSC also screens suppliers for environmental performance, work with them on green design initiatives and provide training & information to build suppliers' environmental management capacity GSC – buyer requiring certain level of environmental responsibility in the business practice RETAIL SUPPLY CHAIN SUPPLIERS Coordinated system to move product from supplier to customer (Raw materials) MANUFACTURERS (Finished product) CONSUMERS DISTRIBUTORS RETAILERS LIFE CYCLE OF PRODUCT Product Design PreManufacturing Manufacture Packaging for Distribution Disposal Use/Reuse & Maintenance Transportation LIFE CYCLE OF PRODUCT (2) There are emissions and consumptions of resources at every stage of product life Life Cycle Assessment (LCA) – process used to evaluate the environmental impact at every stage of production of a product or service Final goal: purchase products with the minimal negative environmental impacts GSC and the 5 Rs Reduce Reuse (Replace) Recycle Refuse (Reject, Return) Repair (Refine) What is a ‘Green’ Product? A ‘Green’ Product: Can be recycled Have a recycled content Be energy efficient Emission reducing Re-usable Biodegradable Organic PURCHASING CRITERIA GREEN PURCHASING POLICY ENVIRONMENTAL PERFORMANCE INFORMATION PURCHASING CRITERIA COMPARISON ON ENVIRONMENTAL IMPACT PRODUCT LIFE CYCLE To cope with environmental problems: focus on input - purchasing GREEN INPUT OUTPUT REDUCED Reduce input (optimal input) Materials: - Non-hazardous - Easy-to-recycle - Energy efficient - Resource saving Recycled material Wastes Pollution Hazardous substances Carbon Dioxide 5R Complete the Circle of recycling Use of recycled products Designing recyclable products Proactive sales of recycled products Green purchasing purchase of recycled products Discharge after sorting/collection →easily recyclable Green Purchasing a.k.a “affirmative procurement” Considering the quality, price and the environment A way of purchasing which gives preference as far as practicable to those products & services which cause least harm to the environment The purchase of items made with recovered materials. It encompasses environmentally preferable purchasing i.e. the purchase of products which are least harmful to the environment & human health Taking into considerations of the quality, price & environment, the purchase of a product or service with the least environmental impact Green Purchasing Environmental issues to consider: Packaging Recycled contents Low energy Longer life Locally produced Low pollution PURCHASING CRITERIA (2) Green Purchasing Policies and Product Specifications Include environmental considerations as a factor Product Life Cycle Emphasis on eliminating or reducing potential risks to health and environment PURCHASING CRITERIA (3) Comparison of Environmental Impact Environmental impact to be given due consideration Environmental Performance Information Manufacturers and distributors to provide comprehensive, accurate and meaningful information for purchasing consideration SUPPLIER AWARENESS AND TRAINING Buyer can use purchasing power to create demand & this demand will in turn push supplier to produce a green product This could spur manufacturer to Use ‘green’ materials Design for the environment and use the resources with efficiency ECO-LABELING Product adhering to pre-defined criteria Eco-labeling: 4 range of products in Malaysia Plastic packaging materials Cleaning agents Recycled paper and Electrical & electronic equipment Companies assign with eco-label should be transparent and accountable in Disclosing finances, evaluation criteria, standards and monitoring procedures ISSUES IN GREEN SUPPLY CHAIN Financial Cost Smaller suppliers have financial constraint and may not devote the necessary resources Essential for consumer to consider overall benefits Awareness amongst consumers Liabilities and Responsibilities Supplier must comply to the laws and regulations Example: Computer manufacturer increase offerings to meet the Green Star standard for energy efficiency ISSUES IN GREEN SUPPLY CHAIN(2) Documentation To meet environmental criteria, consumer can demand supplier to meet standards in operation and practise Formal environmental management system (EMS) or other certification such as International Organisation for Standardisation (ISO) to validate supplier’s compliance ISSUES IN GREEN SUPPLY CHAIN(3) Transparency versus Confidentiality Supplier should be transparent in providing information for customer’s decision making However, lack of protection for innovation & intellectual property challenge the confidentiality of the information ISSUES IN GREEN SUPPLY CHAIN(4) Cooperation and Long-Term Business Relationships Supplier’s effort in addressing the environmental issue can result in: Cost reduction for consumer Greater operational efficiency Enhanced value for consumer Advantage of cooperation between supplier and consumer: Strengthen customer-supplier relationship Shared savings and benefits Green Purchasing & Costs … ■Do not be biased against Green Purchasing – does it cost more ? There are increasing numbers of products which can be purchased at the same price as conventional products. ■Seek measures to avoid cost increases as a whole, including the reduction of purchasing quantity, reuse, etc. ― Reviewing the waste, reconsideration of the necessity, co-ownership, etc. ■Also consider “life cycle costs”. ■Some Green Products may be costly for now, but the stance to support it may be necessary in consideration of the social significance of Green Purchasing: “Social Costs”. PDCA P D PLAN DO A C CHECK ACT Green Purchasing changes a corporation Encouraging environmentally conscious management and product development through the market Eco-design Green Purchasing Consumer Governments and corporations are large scaled-consumer GPN Green market Green Product Corporation Environmentally conscious management Establish a sustainable society Manufacturer/service business End user Environmentally conscious management Parts/Material supplier Develop greener products Raw material supplier ＋ Promotion of green purchasing/procurement Greening supply chain Anyone can take the initiatives Government Corporation Consumer → Green consumer GPN Thank you!